Consumer-duty-deadline Closing in.

[Buckman]

I wonder if S75 and S75(a) of the CCA will be affected?

 

[Jcloughie]

We need to clear up a few points:-

According to Wilipedia

"The Financial Conduct Authority is a financial regulatory body in the United Kingdom, but operates independently of the UK Government and is financed by charging fees to members of the financial services industry. "​

The law is defined by the words of the Act Of Parliament as interpreted by the courts. Whilst the FCA is charged with overseeing the financial services sector, and it has the authority to initiate actions against alleged transgressions, it can only present cases to the courts for the courts to judge. However the FCA is widely regarded as having expert knowledge of these matters and is unlikely to take action without being pretty certain of success. Consequently whilst is word is not the law, it is likely to represent the law. Any decision of sanctions the FCA would like to enforce could be challenged in court.

The document DD posted was from a private company, and represented their view of the situation. I have no reason to believe it is fundamentally flawed, but at the same time you cannot assume it is without error.

The document is clearly designed to be for consumption by the Financial Services Sector, and as often happens different specialities develop some unique phrases and terms which may have a specific meaning in the sector but in common parlance it might be interpreted differently.
Consequently if such a document is read by a person who is not steeped in the sectors practices, they could misconstrue some of the references and language.

Within the document there are referees to other "FCA documents" (from the FCA not private firms) that only apply to organisations that are subject to FCA oversight. This strengthens the notion this Consumer Duty change is directed at the Financial services, and not the whole of the physical manufacturing sector.

I should stress here that I would be in favour of similar duty being placed on all manufactures and sellers, and to some extend the CRA does do this but not in such exacting ways.

Specifically concerning the description of a "Manufacturer" the document defines it as:-

"According to the FCA’s finalised guidance (121 pages / 1.13MB PDF) at FG 6.4, a firm is a manufacturer if it creates, develops, designs, issues, manages, operates, carries out, or – for insurance or credit purposes –"​

​

I have no doubt that financial companies manufacture and sell products. I have not disputed. I have simply pointed out that that terminology does not sit right with me. And clearly, it does not sit right with others hence some of the responses in this thread, and to the link I posted in #16. My only purpose for posting my thoughts on this was simply to explore why people may have interpreted the OP as they did.

Like Roger, I have purchased many financial products over the years and knew exactly what was meant. But nevertheless, as it is not tangible. ..... But it is my problem. 🤭

John

 

[ProfJohnL]

I don't see any reason why the consumer duty should change section 75 of the CCA.

Section 75 can only be invoked if the customer has used a finance product. The effect of the duty may prevent some customers being offered finance, thus if they don't have finance, section 75 cannot be invoked.

The purpose of section 75 is principally for the finance house to ensure its interests to the value of any goods purchased using it's capitol is protected. It's a convenient by product that customers can also benefit from.

What the new duty does is to reduce the possibility for the finance house to take on high risk customers. For some customers, it will make accessing credit more difficult, and it will therefore reduce the number of tools they can use to get retailers to deliver proper remedies when goods go wrong.

 

[Buckman]

I don't see any reason why the consumer duty should change section 75 of the CCA.

Section 75 can only be invoked if the customer has used a finance product. The effect of the duty may prevent some customers being offered finance, thus if they don't have finance, section 75 cannot be invoked.

The purpose of section 75 is principally for the finance house to ensure its interests to the value of any goods purchased using it's capitol is protected. It's a convenient by product that customers can also benefit from.

What the new duty does is to reduce the possibility for the finance house to take on high risk customers. For some customers, it will make accessing credit more difficult, and it will therefore reduce the number of tools they can use to get retailers to deliver proper remedies when goods go wrong.

What about S75(a) which mentions finance linked to credit card? I think this is when someone pays a deposit using a credit card and then gets HP or similar that is linked to the item?

 

[Dustydog]

Section 75 can only be invoked if the customer has used a finance product.

But only where a Consumer Credit Agreement is involved eg credit card but not say a personal Bank Loan or payment by Debit Card. Has something changed?

 

[Buckman]

Section 75 can only be invoked if the customer has used a finance product.

But only where a Consumer Credit Agreement is involved eg credit card but not say a personal Bank Loan or payment by Debit Card. Has something changed?

Not sure who you are quoting, but I was referring to S75(a) and not S75.

 

[Dustydog]

Not sure who you are quoting, but I was referring to S75(a) and not S75.

Prof

 

[Raywood]

Section 75 can only be invoked if the customer has used a finance product.

But only where a Consumer Credit Agreement is involved eg credit card but not say a personal Bank Loan or payment by Debit Card. Has something changed?

I think that with most cases the credit card company will escape in the case of caravans. A £500 deposit should not be a problem, most people would be able to manage that. Provided that it was not a problem account then it should not ring alarm bells and it would not cause the credit company any reason to query it.
A £25.000 loan say after that though would require more investigation and might be too high for the same person, so it would only be then that the problem arises. It could make loans either harder to get or more expensive for many. .

 

[ProfJohnL]

Not sure who you are quoting, but I was referring to S75(a) and not S75.

The same applies. The consumer duty the finance house house would apply to the person applying for a credit card. If the consumer fails the tests, they don't get a credit card, and therefore could not use section 75 or being pedantic section 75a

And before you ask, I have no idea how or if the consumer duty of will be applied retrospectively to existing customers. or to all customers moving forward.

 

[Dustydog]

The same applies. The consumer duty the finance house house would apply to the person applying for a credit card. If the consumer fails the tests, they don't get a credit card, and therefore could not use section 75 or being pedantic section 75a

And before you ask, I have no idea how or if the consumer duty of will be applied retrospectively to existing customers. or to all customers moving forward.

Thanks Prof. Hence my OP. That makes two of us who don’t know😉. A lot of HMG bodies say things but never cogently explain to the public what exactly is involved.